Now
before the Court are Defendants' Motion to Dismiss
Plaintiff's First Amended Complaint (Dkt. # 26) and
Plaintiff's Motion for Partial Modification of the PLSRA
Discovery Stay and Brief in Support (Dkt. # 40). Plaintiff
John Olagues filed this case alleging that Richard E.
Muncrief and Dennis Cameron abused their positions as
corporate officers of WPX Energy Inc. (WPX) and engaged in
prohibited short-swing transactions in violation of Section
16(b) of the Securities Exchange Act of 1934, 15 U.S.C.
§ 78p. Defendants filed a motion to dismiss asserting
that the transactions identified by plaintiff are exempt from
the requirements of § 16(b), and they asked the Court to
take judicial notice of documents related to the
transactions. Dkt. # 27, 28. The Court converted the motion
to dismiss into a motion for summary judgment, and the
parties were directed to submit any additional evidence and
arguments in support of their positions. Dkt. # 39. Plaintiff
asks the Court to allow him to conduct “discrete”
discovery as to defendants' intent in entering agreements
for the distribution of shares of WPX stock to Muncrief and
Cameron, and defendants oppose plaintiff's request. Dkt.
## 40, 41.

I.

Olagues
alleges that he is a shareholder of WPX and was a shareholder
when the transactions at issue in this case occurred. Dkt. #
24, at 1. Muncrief is the president and chief executive
officer (CEO) of WPX, and Cameron is the general counsel of
WPX. Id. at 2. WPX is a Delaware corporation with
its principal place of business in Tulsa, Oklahoma, and its
stock is publicly traded on the New York Stock Exchange.
Id. Plaintiff alleges that Muncrief purchased 90,
000 shares of WPX stock between December 10, 2014 and August
21, 2015, and he alleges that Cameron purchased 1, 800 shares
of WPX stock on August 25, 2015. Id. at 4. Plaintiff
claims that defendants engaged in prohibited short-swing
transactions by either purchasing and selling or selling and
purchasing shares of WPX stock within a six month time
period. Id. The amended complaint alleges that
Muncrief disposed of 90, 000 shares of WPX stock on May 15,
2015, and plaintiff matches this disposition against the
purchases made between December 10, 2014 and August 21, 2015.
Id. Plaintiff claims that Cameron disposed of 1, 800
shares on March 2, 2015, and this was within six months of
his subsequent purchase of 1, 800 shares on August 25, 2015.
He alleges that Muncrief realized a short swing profit of
$375, 600 and Cameron realized a short swing profit of $9,
324. Id.

Plaintiff
is correct that defendants made some open market purchases of
WPX stock, but the dispositions identified in the amended
complaint were made pursuant to restricted stock unit
agreements (RSU Agreements). Plaintiff alleges that Muncrief
disposed of 90, 000 shares of WPX stock on May 15, 2015, and
defendants have produced a Securities and Exchange Commission
(SEC) Form 4 showing that Muncrief disposed of 90, 843 shares
to WPX on that date. Dkt. # 28-3. However, he also received
192, 463 shares on the same day, and the SEC Form 4 clearly
states that he received the shares when his right to the
shares vested under an RSU agreement. Id. Cameron
received 5, 724 shares of WPX stock on March 3, 2015, and a
note on the SEC Form 4 states that he received the shares
pursuant to an RSU agreement. Dkt. # 28-7, at 2. Cameron
disposed of 1, 866 shares to WPX on the same day, and a
separate note on the SEC Form 4 states that these shares were
withheld to satisfy Cameron's tax obligation upon the
receipt of shares under the RSU agreeement. Id.

WPX
established an Incentive Plan (the Plan) on May 22, 2013,
which states that it will remain in effect for 10 years
unless terminated by WPX's board of directors. Dkt. #
28-9, at 6. The Plan is intended to “allow selected
employees and officers of the Company and its Affiliates to
acquire or increase equity ownership in the Company, thereby
strengthening their commitment to the success of the Company
and stimulating their efforts on behalf of the Company . . .
.” Id. The Plan is administered by the board
of directors with respect to non-management directors, but
the Plan created an independent committee with respect to
awards of stock to executive officers of WPX. Id. at
9. The Plan states that the independent committee was
expressly created for the purpose of complying with §
16(b) and other statutory requirements:

In addition, to the extent that the Board considers it
desirable to comply with Rule 16b-3[1] or meet the
Performance-Based Exception, the Committee shall consist of
two or more directors of the Company, all of whom qualify
both as “outside directors” within the meaning of
Section 162(m) of the Code[2] and as Section 16 Non-Management
Directors (the “Independent Committee”). The
number of members of the Committee shall from time to time be
increased or decreased, and shall be subject to such
conditions, in each case as the Board deems appropriate to
permit transactions in Shares pursuant to the Plan to satisfy
such conditions of Rule 16b-3 and the Performance-Based
Exception as then in effect.

Id. at 10. The independent committee is authorized
to take any necessary action to ensure that a transaction
complies with § 16(b), and this includes the authority
to amend the Plan or any provision of an award agreement.
Id. at 17. When shares of WPX stock are delivered to
a grantee, the grantee is required to “remit an amount
in cash, or in the Company's discretion, in Shares,
valued at their Fair Markey Value on the date the withholding
obligation arises, sufficient to satisfy all of the
employer's federal, state, and local tax withholding
requirements related thereto . . . .” Id. at
28.

WPX and
Muncrief executed an RSU Agreement giving him the opportunity
to earn shares of WPX stock, and Muncrief's right to
receive the shares would vest on May 15, 2015 if he remained
an employee of WPX at that time. Dkt. # 28-11, at 1. The RSU
Agreement contains the following provision concerning tax
withholding:

(e) Upon conversion of RSUs into Shares under this Agreement,
such RSUs shall be cancelled. Shares that become payable
under this Agreement will be paid by the Company by the
delivery to the Participant, or the Participant's
beneficiary or legal representative, of one or more
certificates (or other indicia of ownership) representing
shares of Common Stock equal in number to the number of
Shares otherwise payable under this Agreement less the number
of Shares having a Fair Market Value, as of the date the
withholding tax obligation arises, equal to the minimum
statutory withholding requirements. Notwithstanding the
foregoing, to the extent permitted by Section 409A of the
Code and the guidance issued by the Internal Revenue Service
thereunder, if federal employment taxes become due when the
Participant becomes entitled to payment of Shares, the number
of Shares necessary to cover minimum statutory withholding
requirements may, in the discretion of the Company, be used
to satisfy such requirements upon such entitlement.

Id. at 3. Defendants have not submitted a copy of
Cameron's award agreement, but the parties do not dispute
that the same form RSU Agreement was used and that the
relevant provision concerning tax withholding was contained
in Cameron's agreement. Dkt. # 27, at 11; Dkt. # 34, at
6.

On
September 12, 2016, plaintiff sent a letter to WPX alleging
that Muncrief and Cameron made $385, 924 in profits on
short-swing transactions, and he stated that he was a
shareholder authorized to file suit on behalf of WPX for the
alleged violations of § 16(b). Dkt. # 28-12, at 2. WPX
sent plaintiff a letter explaining that the transactions that
he had identified were exempt tax withholding transactions
and that no violation of § 16(b) had occurred. Dkt. #
28-13, at 2-4. On January 7, 2017, plaintiff sent a second
letter threatening to file suit on behalf of WPX, and he
attached a copy of a pro se complaint that he
intended to file in the United States District Court for the
Northern District of Oklahoma. Dkt. # 28-14. Plaintiff did
file suit alleging that Muncrief and Cameron engaged in
prohibited short-swing transactions in violation of
§16(b), but he was not represented by an attorney. Dkt.
# 1. The case was randomly assigned to the Honorable Gregory
K. Frizzell. Defendants filed a motion to dismiss (Dkt. # 11)
the complaint on the ground that a pro se plaintiff
cannot proceed with a claim under § 16(b). The motion to
dismiss was granted and plaintiff's pro se
complaint was dismissed, but he was given 30 days to obtain
counsel and file an amended complaint. Dkt. # 16. Plaintiff
retained counsel and filed an amended complaint (Dkt. # 24),
and defendants filed a motion to dismiss (Dkt. # 26)
asserting that plaintiff had failed to state a claim upon
which relief could be granted. Defendants also filed a motion
asking the Court to take judicial notice of certain documents
that were not referenced in or attached to the amended
complaint. Dkt. # 28. The case was reassigned to the
undersigned, who converted the motion to dismiss into a
motion for summary judgment, and gave the parties 14 days to
submit any additional evidence or arguments. Dkt. # 40.
Neither plaintiff nor defendants provided any additional
evidence, and defendants' motion for summary judgment is
fully briefed.

II.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Summary
judgment pursuant to Fed.R.Civ.P. 56 is appropriate where
there is no genuine dispute as to any material fact and the
moving party is entitled to judgment as a matter of law.
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986); Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 250 (1986); Kendall v. Watkins, 998 F.2d 848,
850 (10th Cir. 1993). The plain language of Rule 56(c)
mandates the entry of summary judgment, after adequate time
for discovery and upon motion, against a party who fails to
make a showing sufficient to establish the existence of an
element essential to that party&#39;s case, and on which that
party will bear the burden of proof at trial.
Celotex, 477 U.S. at 317. “Summary judgment
procedure is properly regarded not as a disfavored ...

Our website includes the first part of the main text of the court's opinion.
To read the entire case, you must purchase the decision for download. With purchase,
you also receive any available docket numbers, case citations or footnotes, dissents
and concurrences that accompany the decision.
Docket numbers and/or citations allow you to research a case further or to use a case in a
legal proceeding. Footnotes (if any) include details of the court's decision. If the document contains a simple affirmation or denial without discussion,
there may not be additional text.

Buy This Entire Record For
$7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.